Monday, June 28, 2010

Winners and Losers - a policy perspective

I recently visited Hyderabad, and had the opportunity to inspect closely the technology city they have built over the past decade, over a rocky terrain (literally). My hosts were kind enough to drive me around, and show me the complete landscape from various vantage points, explaining the workings too.

It was quite an eye-opener, not that we are oblivious to the state's growth (having read in the media so many times).. but seeing it firsthand is always an eye-opener (literally!).

I remember that a few days ago, a senior journalist from a local media house at Indore had interviewed me, and in the volley of questions, there was this one about "how can Indore and MP be made an IT hub like Hyderabad (and Bangalore)?".

I am now in a position to answer it better!

Let me list the things that actually work in favour of making a particular city a "hub" of something. Let me generalise my thinking, and offer a broad perspective. What I write now applies to all success stories, and the lessons are of enduring value.
  1. Political will to transform the status-quo: The whole story starts with a fundamental change in the ruling political party's point of view. When that party sees a big opportunity to make a positive difference (howsoever selfishly that might be construed) and when it starts to articulate a policy based on this changed perspective, things start moving for the first time. Nothing at all will happen without such a political will from the top. It is sad, but true. That "one" person at the top proves to be the harbinger of positive development, and without that person, all dreams are but just dreams.
  2. Personal mission of the top politicians and bureaucrats: It is not enough to have an amorphous vision from the "Party". You need someone, some "one" to take personal charge of the mission to make that difference. You need that one charismatic and sensible leader who makes this vision his/her own, speaks about its need, and then goes about implementing the same. While this happens, the party at large has to support this "one" person, and not pull him/her down, which may happen in case the vision is truly compelling and may end up making him a star!
  3. The first breakthroughs: Once the mission is articulated and starts to take shape, the first breakthroughs must happen rather quickly. All stops need to be pulled out for that. Realising fully well that there will be others in the race to attract the same few companies that set up shop as the pioneers (in that state), speed is all too crucial. The machinery has to move very fast, in a lubricated manner, to attract the best of breed corporations (of that particular sector) and help them start operations. This again, requires personal commitment from the top political leadership. There are bound to be significant hurdles in the way - of every nature - and they have to be strongly (brutally) pushed aside for the new vision to take shape. Yes, a democracy tax needs to be paid (in terms of legal wranglings arising out of differing perceptions in matters like land acquisitions etc.), but all that has be contained to a level that does not throw the mission off the track.
  4. Building on the first breakthroughs: As soon as signals are apparent that the first breakthroughs have been achieved, the system needs to quickly build on those. The success stories need to be circulated to other majors of that sector, so that they are prompted to invest quickly, lest they should miss the bus. Roadshows need to be accelerated in this phase.
  5. Healthy overall eco-system: A virtuous cycle automatically builds up in this process. Good companies, good humanware, good support services, good public response - they all end up supporting each other. The region's economy starts to transform. Things look positive for every stakeholder. This is perhaps the most important aspect of a big victory. Isolated success stories of individual companies may not make that big a difference (WalMart in Bentonville, Arkansas surely is an exception!) but a whole set of factors surely does.
  6. People's support for the change: It is interesting to note that largely, the people of Andhra have not supported the IT cyberisation of Hyderabad. This is obvious from the fact that the pioneer Mr Chandrababu Naidu lost elections due to oversell of the IT story. But the people did not say - "throw out the IT companies". They simply said "Enough of all this - now focus on the villages". That is a big eye-opener. Those who got in, stayed there. They were not charged in a hostile manner. They continued to operate profitably.
  7. Consistency in policy: What is good about such stories is that the next government (of a different political party) finds it profitable to continue the old policies below-the-radar as that helps the international image of the new party in power. This has happened in AP. Policy continuity was welcomed by the IT majors operating there, and the virtuous cycle continued to benefit thousands.
  8. Good luck! No matter how much one plans, ultimately a lot of it boils down to sheer good luck. States that have successfully managed to bring a revolution (in some sector) owe a lot of it to the positive confluence of a lot of factors many of which surely they could not have controlled. So lady luck is always to be sought in abundance!
Unfortunately, if we talk of IT, my state (Madhya Pradesh) has missed the bus. None of these factors seem evident, and yet there are hopes expressed off and on in media about a positive possibility. It is not happening anytime soon! Interestingly, winning states may lose in other fields to losers (in IT for example), and so on. But the lessons must be learnt fast for that to happen.

The horrible truth is : these states (like Andhra Pradesh) have built the critical mass in IT infrastructure already. It is all too easy for an IT major to set up shop profitably there - everything is readily available. So with every passing month, the entry barrier for the other states goes up significantly. Why should I, as an IT major, even bother to think of any other state when established solutions are already available? So honestly, when someone tells me that they have constructed one huge building (call it an IT park) and that will be the IT hub of a city, it sounds like a cruel joke to me, as cities like Hyderabad have hundreds of those-sized buildings already brimming with action, life, hope and revenues. It's not about a building, it's about a whole friendly ecosystem. I am not a pessimist, but this surely beats all imaginable heights of optimisim!

Have we learnt the lessons, and are we willing to outdo others in other fields at least? With every major battle won (and lost), we do tend to come to final conclusions about the end of the world! But it is not so. There are always emerging industries waiting in the wings. Genetic science, renewable energy, next wave of Telecom and 3G.. it's all yet to happen. Business has a certain cruelty to it - successful empires often are left by the wayside when new ones emerge. So there will be another set of winners. And losers. Wait and watch.


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Unknown said...

Hi Sir,

Every time your blog amazes me with the way the complex problems, phenomena, situations( Ranging from Students, professional, Technology, World problems, Politics, and what not) along with their reasons, solutions & implications are given such an insightful opinion in a very straight forward and simple way, Though they have a very very deep meaning and sheer knowledge of the topic.
Coming to this particular article –What a thoughtful observation and conscientious suggestions! Although it was really painful to read you write that Indore has missed the bus for IT, many people like me in Mumbai and also in Pune would agree with me, I always hoped that an IT park is coming to Indore and I will get to go back to Indore:). I only wish if you could give this article to the Journalist who interviewed you, so that majority of the people from Indore can read this and most importantly the politicians- the supposed to be care- takers of Indore, and may that some ‘one’ awakens; so that we be the winner in coming times and at least some buses are caught!

View Point: Nivsarkar, Himanshu said...


You have actually deciphered this topic very well, if you have to see success at more organized level Gujarat is the state to study, the wholistic development work done by administration( civil and political) has actually leverage the spirits of the Gujarati people, this also resonates in case of Andhra people, today if you look at the Indian infraturcture development companies 90% or more are owned by Andhra people, the same is true in trading, chemical and financial business for Gujarati people.
It would be a interestung case study when we can study the human element for these successes.

Test said...

@pandey_ana84 : I totally understand your frustration with such system failures. I share the same. Thanks for reading my blog and commenting!

himanshu : The Gujarat example is a case-study of how a government can actually leverage the raw energies of its entrepreneurial people. Rightly said!

Kanchan said...

Hello Sir,

It is always a pleasure to read your blogs! I have a question: What can a person do when he/she is trying to improve the system and the environment he/she is in does not at all favour? Do such leaders fail? Or is it always right to adjust according to situations even when you know they are not ideal?

Unknown said...

Respected Sir,

I have just completed reading all your blogs and all of them are simply superb and are a delicious treat for readers.Your years of experiences and observations are put in a simple and very forceful style in your blogs.

Its a request to write about "The Fountainhead" and "The Atlas Shrugged" in your blogs sir, as these were the first books recommended by you during my PT classes.These 2 books have helped me immensely and are truely inspirational.

You had said in my class once that "We all are born to win" which i find very true now.

Eagely waiting for your next blog.

Thank you,
Meeta Walunjkar,Pune
PT Alumni


Dear sir, thank you very much for sharing your valuable experience with us. It is always pleasure to read your blogs. Your insightful blogs add rational and logical point in our thoughts. I also feel that many of cities have gone so far in IT sector. If we talk about MP, it is not too late but there is need to take initiative. Once any work starts, step by step it must be completed. Hundred of projects come but not implement lake of political interest. If any person wants to do something but they don't get all favor. As you mentioned about A.P people, they opposed but never became hostile. Same in Gujarat case political leader and bureaucratic supported and we can see how developed it is. Now a days people understand that what's good and bad for them but they need strong leadership which can drive them in right way.

Thank you,
Proton Pradeep Gupta

Shoaib Qureshi said...

Dear Sir, fantastic overview of how IT industry has set its foot in the southern part of India majorly Hyderabad & Bangalore. I too once had a chance to visit the Cyberabad (as they like to call it in Hyderabad) in 2004. I was simply amazed by the amount of IT companies & their size. Other states especially ours has a long way to go.

Shoaib Qureshi

siyaram vishwakarma said...

Respected sir,
very well explained the problems in opening or making a city as IT far as indore is concerned why can't we start making it IT hub from ground level if such problems persist in indore.means let us allow few of the MNCs to open their offices in indore.